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2023 (3) TMI 1311 - AT - Income TaxReopening of assessment u/s 147 - as argued notice issued u/s. 148 as not in accordance with the provisions contained in section 148 to 151 - Additions u/s 68 - Unknown and unexplained cash deposits in bank accounts - HELD THAT - In the present case, the communication of the satisfaction by the Ld. Pr. CIT-12, Kolkata on the proposal made by the Ld. AO for taking action u/s. 148 of the Act was communicated to the AO only on 31.03.2017 as is evidenced by the letter dated 27.03.2017 extracted above. However, the notice u/s. 148 has been issued on 29.03.2017 which is prior to the date of receipt of communication from the office of Ld. Pr. CIT-12, Kolkata towards his satisfaction that it is a fit case for the issue of such notice. Accordingly, in our considered view, we find force in the submissions made by the Ld. Counsel, to hold that the notice issued u/s. 148 of the Act is not in accordance with the provisions contained in section 148 to 151 of the Act, rendering the entire assessment proceeding invalid. On the merits of the case, we note that from the very first instance, assessee had been in a very loud and clear manner categorically denying the fact that the alleged two bank accounts and the transactions of deposit in cash/transfer therein are not his and has always disowned the same. He has taken the possible steps of making complaint to the Police station seeking appropriate redressal and enquiry on the matter by bringing the relevant facts on record. We note that both Ld. AO as well as Ld. CIT(A) have not undertaken any exercise of enquiry or examination on the assertions made by the assessee nor have made any attempt to find out the status of any action taken by the Police on the complaints made by the assessee. Thus chronology of events, provisions of the Act and the lack of adequate enquiries on the part of the authorities below despite possible actions undertaken by the assessee, we are of considered view to allow the grounds of appeal, both on the legal issues raised and on the merits of the case holding that assessment order is bad in law and no addition is called for as alleged by the Ld. AO. Appeal of the assessee is allowed.
Issues Involved:
1. Legality of the proceeding initiated under Section 148 of the Income-tax Act, 1961. 2. Validity of the assessment order passed under Section 147 of the Income-tax Act, 1961. 3. Compliance with conditions contained in Section 151 of the Income-tax Act, 1961. 4. Addition of Rs. 9,75,90,067/- under Section 68 of the Income-tax Act, 1961. Summary: Legality of the Proceeding Initiated Under Section 148: The assessee challenged the legality of the assessment proceedings initiated under Section 148 of the Income-tax Act, 1961. The notice under Section 148 was issued on 29.03.2017, but the approval from the Principal Commissioner of Income Tax (Pr. CIT) was received only on 31.03.2017. This discrepancy indicated that the notice was issued without the necessary prior approval as mandated under Section 151 of the Act. The Tribunal found this procedural lapse to render the entire assessment proceeding invalid. Validity of the Assessment Order Passed Under Section 147: The Tribunal noted that the reasons to believe recorded by the Assessing Officer (AO) were based on information received from another department, which lacked independent application of mind. The AO's reasons to believe contained an incorrect bank account number, further questioning the validity of the assessment order. The Tribunal found that the assessment order did not comply with the provisions of Sections 148 to 151 of the Act. Compliance with Conditions Contained in Section 151: The Tribunal observed that the approval for issuing the notice under Section 148 was communicated to the AO only on 31.03.2017, while the notice was issued on 29.03.2017. This indicated non-compliance with Section 151, which requires prior approval from the Pr. Commissioner. The Tribunal held that the notice issued without prior approval was not in accordance with the law. Addition of Rs. 9,75,90,067/- Under Section 68: The assessee denied ownership of the two bank accounts in question and claimed that they were opened fraudulently using his documents. The Tribunal noted that the AO and the Commissioner of Income Tax (Appeals) [CIT(A)] did not conduct adequate inquiries to verify the assessee's claims. The assessee had filed complaints with the police regarding the fraudulent use of his documents, but no action was taken by the tax authorities to investigate these claims. The Tribunal found that the addition of Rs. 9,75,90,067/- was not justified as the assessee had consistently disowned the bank accounts and the transactions therein. Conclusion: The Tribunal allowed the appeal of the assessee, holding that the assessment order was bad in law due to procedural lapses and lack of adequate inquiries. The addition of Rs. 9,75,90,067/- was also found to be unjustified. The appeal was allowed on both legal and merit grounds, and the assessment order was set aside. Order Pronounced: The order was pronounced in the open court on 17th March, 2023.
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